Luckin Coffee, the Starbucks equivalent in China, said in an announcement on February 17 that a special board panel concluded an internal investigation of chairman and CEO Guo Jinyi and found no evidence of misconduct.
Luckin Coffee's board of directors will continue to fully support Guo and the management team, the announcement said.
Luckin Coffee said the task force interviewed nearly 40 people and reviewed more than 50,000 transaction documents, emails and found that certain members of the former management were involved in the planning of a previous petition calling for his removal.
On January 7, according to media reports, seven Luckin Coffee vice presidents, all branch general managers, and core business executives signed a joint letter requesting the removal of Guo as Luckin Coffee's chairman and CEO.
Luckin Coffee responded at the time, "The reports were true, but we are not at liberty to disclose the details at this time.
A letter titled "Request for Removal of Guo Jinyi from the Position of chairman and CEO of Luckin Coffee" was also circulated at the time.
The letter alleged that Guo had three major problems: he controlled the purchasing system and was too close to suppliers; he was cronyism, resulting in low employee morale and a large loss of internal talent; he did not have the ability to lead Luckin Coffee and did not have enough strategic planning skills.
Later, Guo issued an internal letter saying that he had asked the board of directors to set up an investigation team. Guo said that the letter circulated online was drafted by a former executive on January 3, and some employees were forced to sign it.
On February 5, Luckin Coffee filed for bankruptcy protection under Chapter 15 of the US Bankruptcy Code in New York. Meanwhile, Luckin Coffee said that all of the company's stores in China are still open and serving customers, and no significant impact on day-to-day operations is expected.
On December 16, 2020, Luckin Coffee agreed to pay a $180 million fine in a settlement with the SEC, according to an announcement on the SEC's website.
Luckin Coffee's shares traded on the OTC market closed up 18.18 percent to $7.02 on Thursday.